According to US regulators, cryptocurrencies can pose a threat to the US financial system, so you need to “adjust accordingly” the scope of digital assets.
The voluminous report presented by the US Financial Stability Board examines various threats to the country’s financial system, including from cryptocurrencies. The study involved officials from several US departments who concluded that digital assets need to be more carefully regulated.
“Digital assets have grown significantly in scale in recent years. They have attracted large amounts of capital and interest from both retail and institutional investors. At the same time, we see various shocks and significant volatility in the cryptocurrency markets, including over the past year. Given this volatility, the Council has named cryptocurrencies a priority for its study,” said US Treasury Secretary Janet Yellen.
The authors of the report believe that volatility in the crypto asset ecosystem has increased significantly, given the lack of risk controls and the ability to trade with leverage. Prices in the cryptocurrency market are driven by speculative sentiment rather than fundamental economic opportunities. The market, analysts complain, is subject to periodic and large-scale falls, which again creates risks.
The report notes that digital tokens are often used by companies “with risky business strategies and opaque capital and liquidity positions.” There is also a danger in the centralization of key services for the cryptocurrency ecosystem.
“This market is not that decentralized. We see that there are large centralized intermediaries in the industry that provide many different services. In traditional financial markets, these services are usually split between different companies,” explains SEC Chairman Gary Gensler.
The authors of the report advise the US government to strengthen the regulation of the cryptocurrency market, the application of existing regulations for traditional financial markets. Analysts also recommended a bill that would give financial regulators the power to oversee the market for spot digital assets that do not fall under the definition of securities.
In March, U.S. President Joe Biden ordered federal agencies to join forces to develop rules to oversee crypto assets and examine the risks of implementing them. The published report was a response to this order.
Source: Bits
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